Xbox One to cost more than PS4, says Pachter

The Xbox One will launch at a non-subsidised price of $399, Wedbush analyst Michael Pachter has told investors in his pre-E3 research note.

According to Pachter, this will put the Xbox One in stores $50 more expensive than his estimated $349 PS4.

Microsoft is also expected to make a profit on each Xbox One sold, with the estimated bill of materials coming in at $325. Elsewhere, the PS4 is believed to cost Sony $275 – presumably cheaper because of the Kinect costs associated with the Xbox One.

However, the next generation is expected to bring a new subsidised model to the table, an area in which Microsoft looks better placed to capitalise on, says Pachter.

“In our view, the Xbox One is the more likely of the two new consoles to be subsidised due to its functionality,” wrote Pachter. “We believe the ability to watch live TV from a cable, telco, or satellite set-top box through Xbox One could entice an MSO to drive subscriptions through a subsidised box in exchange for a multi-year contract.

“The ‘always connected’ requirement for the Xbox One likely means that a broadband connection will be required, suggesting to us that ISPs may have an incentive to offer a subsidy as well.”

He continued: “In addition, Microsoft could conceivably subsidise the Xbox One through prepaid Xbox Live Gold subscriptions (as it has done on a limited basis in the past) or premium Skype functionality as well.

“Similarly, Sony could subsidize the PS4 through prepaid PlayStation Network subscriptions, but unlike Microsoft, it does not have a history of doing so. We believe that many of the multimedia functions demonstrated at the Xbox One reveal event could be emulated by Sony in the next year or so through a firmware update.”

Source: Wedbush Investor Note